India is one of the few countries that protect users through the mandate of two-factor authentication for digital payment transactions, said MK Jain, Deputy Governor, Reserve Bank of India (RBI) on Monday in Mumbai.
Speaking on cyber security for a safer financial system at a G-20 event, he said that although it is now recognised as an innovative regulation, at the time when RBI introduced it about a decade back, there was pushback and criticism.
“Similarly, recent measures such as better customer control on card usage, shorter turn-around-times for transaction failures, tokenisation, etc. are all initiatives intended to protect the customer.”
He added that cyber risks can have a significant impact on financial inclusion efforts as well.
“Financial inclusion aims to provide access to financial services for underserved and marginalised populations, and rapid strides have been made in this area facilitated by digital public infrastructures,” Jain added.
However, he added that these populations are more vulnerable to cyber risks due to their lack of awareness about cybersecurity.
He mentioned that individuals can lose trust if they are brought online in the name of financial inclusion only to be exposed to cyber harms that they cannot recover from.
“For digital financial inclusion to be successful, it is not enough to bring people into the digital economy. All the stakeholders must also ensure that people are resilient against the risks they will be likely exposed to,” the deputy governor stated.
He also said that cyber threats transcend geographical boundaries, making it necessary for countries and financial institutions to work together to address them.
The global financial system’s interdependencies need to be better understood by mapping key operational and technological interconnections, including that of critical infrastructure, RBI’s Jain stated.
He added, “Better incorporation of cyber risk into financial stability analysis will improve the ability to understand and mitigate system-wide risk.”